More "Bailout" Monies Repaid to Fed

Financial institutions that received emergency funds fromrnthe Federal Government during the financial meltdown of 2008 continue to repayrnthat debt to the Federal Reserve Bank of New York.  Yesterday Maiden Lane LLC (ML) and MaidenrnLane III LLC (ML III) fully repaid their obligations with interest.  A third entity, Maiden Lane II LLC, paid offrnits debt earlier this year.  </p

The Maiden Lane trio was established by the Fed in Aprilrn2008 as “special purpose vehicles” to facilitate the merger of Bear Stearns andrnJPMorgan Chase.  At the time Chasernacquired Bear Stern which was facing imminent bankruptcy, Chase contributed $1rnbillion and the Fed contributed $29 billion in the form of a senior loan thatrnwas used to purchase the asset portfolio of the failing company.  The original amounts the ML and ML III debts werern$28.82 billion and $24.3 billion respectively.  The Maiden Lane transactions occurred beforernthe TARP bailouts.</p

William C. Dudley, president of the New York Fed, said, “Thisrnis a major milestone for the Bank and for the public. The successful repaymentrnof the New York Fed’s loans to ML LLC and ML III LLC marks the retirement ofrnthe last remaining debts owed to the Bank that stemmed from the crisis-erarninterventions with Bear Stearns and AIG.  The Maiden Lane entities werernestablished to protect the U.S. economy at a time of great economic stress, andrnI am pleased we were able to accomplish that policy objective and be fullyrnrepaid.” <br /<br /The New York Fed, through BlackRock Solutions, will continue to sell thernremaining assets from the two portfolios when market conditions provide good valuernfor the public.  There is no fixed timeframe for these sales.  Proceeds from future sales of ML will be usedrnto retire the subordinated loan extended by JPMorgan Chase & Co., afterrnwhich the New York Fed will receive all residual profits, and proceeds fromrnfuture sales in ML III will be used to repay the equity contribution extendedrnby AIG, after which the New York Fed will receive two-thirds of residualrnprofits.

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